16 February 2017

Ballard Power Systems has signed a definitive agreement relating to technology transfer, licensing and supply arrangements with strategic partner Zhongshan Broad-Ocean Motor Co., Ltd. (Broad-Ocean) for the assembly and sale of FCveloCity 30 kW and 85 kW fuel cell systems in China. Under the deal, Broad-Ocean will manufacture fuel cell modules in three strategic regions in China, including Shanghai. The deal has an estimated value of approximately $25 million in revenue to Ballard over the initial 5-year term, including $12 million in Technology Solutions revenue.

In August 2016, Broad-Ocean became Ballard’s largest shareholder following an investment of $28.3 million in Ballard common shares, representing approximately 9.9% of Ballard’s outstanding common shares following the transaction.

Converging macro trends in China, including large-scale urbanization, continued build-out of mass urban transportation, degrading air quality and a mandate to address climate change, together present an historic opportunity for zero-emission fuel cell solutions in the world’s largest mobility market. Our strategic partnership with Broad-Ocean is a central piece in our China strategy, premised on the establishment of a comprehensive local fuel cell supply chain and related ecosystem to address the fast-growing clean energy bus and commercial vehicle markets.

—Randy MacEwen, Ballard President and CEO

In each of the three assembly operation locations, Broad-Ocean plans to engage with local governments as well as with bus and commercial vehicle OEMs for deployment of fuel cell buses and commercial vehicles incorporating Ballard-designed modules manufactured by Broad-Ocean.

Broad-Ocean will make payments to Ballard at closing and based on certain commissioning milestones, initial supply agreements, and recurring royalty payments. Ballard will also have the exclusive right to purchase fuel cell engines from any of the Broad-Ocean manufacturing operations for sale outside China.

Each fuel cell engine assembled by Broad-Ocean will utilize FCvelocity-9SSL fuel cell stacks, initially manufactured by Ballard at its Vancouver HQ facility. Stack supply will be transferred to Guangdong Synergy Ballard Hydrogen Power Co., Ltd. (JVCo), the joint venture owned by Guangdong Nation Synergy Hydrogen Power Technology Co. Ltd. (Synergy) and Ballard in the City of Yunfu in China’s Guangdong Province, once JVCo becomes fully operational, expected in late-2017.

From that time forward, Ballard will supply membrane electrode assemblies (MEAs) on an exclusive basis for stacks manufactured by JVCo.

This transaction is subject to customary closing conditions and is expected to close by Q2 2017.

Founded in 1994, Broad-Ocean is headquartered in the City of Zhongshan in Guangdong Province and is listed on the Shenzhen Stock Exchange. The Company is a leading global manufacturer of motors that power small and specialized electric machinery for electric vehicles (EVs), including buses, commercial vehicles and passenger vehicles, and for heating, ventilation and air conditioning (HVAC). Broad-Ocean produces more than 50 million motors annually for customers on 5 continents.